Abstract

The Asian currency crises have raised questions about the effectiveness and appropriateness of IMF conditionality demands imposed upon crisis countries. The IMF has been accused of failing to predict a currency crisis in Asia, to halt the collapse of the exchange rate, to stop contagion spreading from Thailand to the rest of the emerging markets, and to prevent crisis countries from falling into deep recessions. Critics argue that much of the fault for the failures was due to misguided conditionality demands imposed on crisis countries by the IMF. Criticism of IMF conditionality can be categorized into three types: questioning tight fiscal policy, tight monetary policy, and the appropriateness of structural policies.